Alibaba goes all social with eCommerce

New York: Alibaba Group Holding Ltd. has tried to shake the perception that it’s just the eBay Inc. or Amazon.com Inc. of China, by pushing into social media and entertainment and actively investing in start-ups like Snapchat Inc.

Chairman Jack Ma’s sprawling pursuits are starting to pay off. Alibaba’s Taobao mobile app is a riot of tiny print and icons that allow users to join a chat group for fishing enthusiasts, book a trip and buy a new rod. The one-stop-shop format has resonated with China’s young users, who are spending longer on the site than visitors to Amazon or Twitter Inc.’s mobile sites, and has helped more than double mobile revenue in the most recent quarter.

“To capture the attention and imagination of young people you have to provide more social features,” Alibaba’s co-founder and Vice-Chairman Joseph Tsai said. “We want to continue the sense of community so that they’ll come back and engage with the platform.”

Alibaba started Taobao in 2003 as an eBay-like site for small businesses and entrepreneurs to sell directly to consumers. In the last few years, it’s added social and entertainment features to keep people on the app longer, increasing the chance they’ll buy products. The strategy worked.

Monthly mobile active users increased 39 per cent to 427 million and mobile revenue jumped to $2.6 billion (Dh9.5 billion) in the June quarter. People visit the app more than 7 times a day for more than a total of 25 minutes. That compares with about 9 minutes on Amazon’s mobile app and 16 minutes on Twitter’s app on days when users visit.

“Amazon doesn’t get people on the website 7 times a day,” said Gil Luria, an analyst at Wedbush Securities Inc. “The level of engagement Alibaba’s able to create is more than what we’d consider with search companies and social companies. They’re investing a lot into making their tools have social engagement like Facebook.”

Taobao users can join one of its 1,000 special interest groups to chat about topics from wedding planning, to sports to baby showers. Last year, the site started a programme to get bloggers and experts to post content by offering them a commission for making product recommendations. Alibaba also recently rolled out the Taobao news feed that’s grown to more than 1,300 media outlets that provide content to its 80 million-plus monthly active users. A few months ago, Taobao added video live-streaming for bloggers and merchants to interact with consumers.

Tsai says that more social features will be added to Taobao, but only ones that will lead to more sales. Users may not make a purchase every time they open Taobao, but the activities pique their interest in potential merchants, whether that’s watching a live broadcast with a Chinese celebrity testing out new make-up or participating in a special interest group discussing fishing products.

“We’re already at the holy grail point where our users have very high desire to buy things and they’re very commercially minded,” Tsai said. “On Facebook you’re friend-ing all of your friends because you already know each other. In our case, we start with strangers but then use data to find a commonality of interest and create a community around that interest.”

Mixing social media with e-commerce hasn’t really taken off in the US, where consumers are used to separate apps for specific purposes, according to Luria. On the other hand, China has a rapidly growing base of smartphone users that are accustomed to messy interfaces with as many features as possible.

“For a lot of Chinese companies, distribution is so prized and valuable that if they can add-on other elements to the same user-base, they will consider it,” said Connie Chan, a partner at Andreessen Horowitz. “Most of the Chinese players recognise that having more touch points in a user’s life is probably the main goal.”

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